Microsoft transmits a wealth of information from Windows PCs to its servers in the clear, claims security researcher.

If hackers are looking for systems running outdated, and thus, vulnerable versions of Windows — XP SP2, for example — the in-the-clear reports will show which ones have not been updated.

Windows Error Reporting is installed and activated by default on all PCs running Windows XP, Vista, Windows 7, Windows 8 and Windows 8.1, Watson said, confirming that the Websense techniques of deciphering the reports worked on all those editions.

Watson characterized the chore of turning the cryptic reports into easily-understandable terms as "trivial" for accomplished attackers.

More thorough crash reports, including ones that Microsoft silently triggers from its end of the telemetry chain, contain personal information and so are encrypted and transmitted via HTTPS. "If Microsoft is curious about the report or wants to know more, they can ask your computer to send a mini core dump," explained Watson. "Personal identifiable information in that core dump is encrypted."

Microsoft uses the error and crash reports to spot problems in its software as well as that crafted by other developers. Widespread reports typically lead to reliability fixes deployed in non-security updates.

The Redmond, Wash. company also monitors the crash reports for evidence of as-yet-unknown malware: Unexplained and suddenly-increasing crashes may be a sign that a new exploit is in circulation, Watson said.

Microsoft often boasts of the value of the telemetry to its designers, developers and security engineers, and with good reason: An estimated 80% of the world's billion-plus Windows PCs regularly send crash and error reports to the company.

"We've substantiated that this is a major risk to organizations," said Watson.

Error reporting can be disabled manually on a machine-by-machine basis, or in large sets by IT administrators using Group Policy settings.

Websense recommended that businesses and other organizations redirect the report traffic on their network to an internal server, where it can be encrypted before being forwarded to Microsoft.

But to turn it off entirely would be to throw away a solid diagnostic tool, Watson argued. ERS can provide insights not only to hackers and spying eavesdroppers, but also the IT departments.

"[ERS] does the legwork, and can let [IT] see where vulnerabilities might exist, or whether rogue software or malware is on the network," Watson said. "It can also show the uptake on BYOD [bring your own device] policies," he added, referring to the automatic USB device reports.

Microsoft should encrypt all ERS data that's sent from customer PCs to its servers, Watson asserted.

A Microsoft spokesperson asked to comment on the Websense and Der Spiegel" reports said, "Microsoft does not provide any government with direct or unfettered access to our customer's data. We would have significant concerns if the allegations about government actions are true."